Everything You Need to Know About French Pensions

 

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Everything You Need to Know About French Pensions

How does the French pension system work for expats living in France, how much is the French state pension, and what are the other pension options available to you? Here’s what you need to know about French pensions.

How Does the French Pension System Work?

France’s state pension or l’Assurance Retraite is compulsory, meaning that all workers, whether employed or self-employed, must pay contributions to a pension fund. The French pension scheme is made up of two parts, both of which are compulsory and set by the state (i.e. you don’t get to opt out of either or choose the type of complementary regime – it depends upon your profession):

  • Régime de base: this is the basic state pension, and it’s calculated based on how many quarters (trimestres) you have worked and paid social charges in France.
  • Régime complémentaire: this is a complementary pension, based on a points system, which varies depending on the type of job you do and your salary.

French Pension Reforms

Part of French President Emmanuel Macron’s proposed changes when he was elected back in 2017 was to make major reforms to the French pension regime. Put simply; the reforms would raise the earliest retirement age to 64 (it is currently 62) and implement a universal points-based system. Most notably, it would take away some of the privileges afforded France’s régimes spéciaux (which include active civil servants, SNCF and Banque de France workers, and teachers) such as early retirement or final salary pensions, to bring them more in line with the rest of the population.

Due to mounting protests (most notably by the Yellow Vests or Gilets Jaunes) and the economic situation as a result of the Covid-19 pandemic, these reforms have been put on hold. With elections set for 2022, it seems unlikely that these reforms will be enacted in the immediate future. However, it is important to be aware that the information in this article is subject to change if and when these reforms are made.

Paying Into Your French Pension Fund

French pension contributions are calculated per ‘trimestre’ (quarterly). Every trimester that you work in France and pay your contributions counts towards your total number of trimesters. Under the current system, the amount of your pension depends upon this number of trimesters, as well as your average salary throughout your working life.

French Pension Contributions: Salaried and Self-Employed Workers

In the simplest of scenarios, where you are in salaried full-time work, each of these trimestres (a total of four per year) will be validated for every year that you work. Your pension contributions will be covered as part of the social charges paid by you and your employer.

Equally, for business owners and self-employed workers, such as those under the Micro-Entrepreneur (Auto-Entrepreneur) scheme, for example, your pension contribution will be included under the social charges you pay on your revenue each trimester. As with salaried workers, your ‘trimestres’ will be calculated based on your revenue each quarter and the corresponding amount of social charges paid.

How many years do you need to work in France to receive a French pension?

To receive a French pension, you generally need to have worked a minimum of 10 years in France (if you’ve worked in other EU countries prior to arriving in France, this will also be taken into account – see our article France, UK, and EU State Pensions for Expats- Where to Claim Your Pension for more on this).

To receive the full state pension in France, you will need to work a minimum of 40 years in France, paying your pension contributions for the full four trimestres per year. The exact amount of years/trimestres required depends on your age (those born in the 1950s and 1960s require slightly fewer contributions, while those born in the 1970s or later require slightly more – see a full breakdown here).

A person entering the workforce in 2022 under the current state pension system, for example, would need to work a minimum of 43 years or 172 trimestres in order to qualify for a full state pension in France.

Validating your French Pension ‘Trimestres’

There are three ways that these trimestres can be validated:

  • Trimestres cotisés: These are trimesters in which you have paid your pension contributions. Under the current regulations, a ‘paid’ trimestre is one in which you have earned a minimum of 150 x SMIC (the French minimum wage). You can see the exact amounts required for each year here. For micro-entrepreneurs, you will need to earn a minimum annual revenue in order to validate one or all four pension trimestres. The minimum revenue depends upon the type of activity practised, and you can see a full list here.
  • Trimestres assimilés: These are trimesters credited due to periods of unemployment, military service, maternity leave, illness, or disability.
  • Trimestres accordés: These are additional trimesters allowed in certain cases, such as stopping work to raise children or if you have a handicapped adult under your care.

How Much Will My French Pension Be?

The ‘Régime de Base pension is calculated using the following formula (although, as with all French taxes and social security calculations, it’s best to take this as a rough guide, as there may be other factors at play).

Average yearly income x Pension rate x Length of insurance / Reference length

The average yearly income is calculated based on your 25 highest-earning years (for those born in and after 1953), capped at €40,524 (as of 2019).

The maximum rate (50%) is afforded if you have reached the age of full pension entitlement (67 for those born in or after 1955) OR have accrued the full number of trimestres (as outlined above).

The length of insurance is the total calculation of years/trimestres that you have paid your pension contributions, while the reference length is the average insurance length set by the Assurance Retraite.

The Régime Complémentaire pension is calculated using a points system but is generally paid in full if you qualify for the full Régime de Base pension. If you only qualify for a reduced Régime de Base pension, the Régime Complémentaire will equally be paid at a reduced rate.

Calculating your French pension

So, how much can you expect to receive for a full French pension? As you’ve probably realised by now, it’s more than a little complicated, so the best way to get an idea is to run a calculation via the Assurance Retraite website here.

You will need to create an account (‘Creer un espace personnel’), after which you can request a calculation of your pension rights (‘demander mon relevé de carrière tous régimes (RIS)’). This website is also the best place to find out all the answers to your questions regarding French pensions.

For a more detailed look at your pension and personal situation, it’s a good idea to speak directly to your local Cnav, Carsat, CGSS, or CSS branch (the different departments that deal with Assurance Retraite).

Claiming Your French Pension

In order to claim your pension in France, you must apply six months before the date of your retirement. This can be done online through your Assurance Retraite account, or using a paper form. You will need to submit various papers, including your passport and titre de séjour, a photocopy of your last tax return (avis d’imposition), your bank RIB, and your livret de famille (if you are a parent). You should receive confirmation of your request within one month, but it normally takes around two months for a pension application to be processed.

For business owners, you must inform the Centre de Formalités des Entreprises (CFE) of your retirement, while self-employed micro-entrepeneurs/auto-entrepeneurs can do this via the auto-entrepeneur website. You will be issued a ‘certificat de radiation du Centre de formalité des entreprises en cas de cessation d’activité’ which you need to include in your pension application.

Retirement Age

The minimum retirement age in France is 62, but the age of full pension entitlement is 67 (for those born in or after 1955).

If you wish to retire at 62 (the minimum retirement age) with a full pension, you must have already accrued the required number of trimestres. There is also an option to purchase additional trimestres – “rachat des trimestres” if you fall short.

Claiming a widow’s or widower’s pension in France

If your spouse receiving a French pension dies, you must report this to the Assurance Retraite. Widow and widower pensions are not automatically awarded in France, and you must apply within two years of the death of your spouse (or within 12 months if you wish for the payments to continue). You cannot claim a widow’s pension in France until you reach the age of 55.

Private Pension Plans in France

Taking out private pension plans is not deemed as essential in France as it might be in the UK, United States, and some other countries. In the UK, for example, where state pensions are notoriously low (average UK state pensions equate to just 28% of a person’s salary at the time of retirement, in comparison to France’s 74%), it is very common to have a private pension plan in addition to your state pension, and many companies have some type of workplace pension scheme in place.

However, if you’re worried that you won’t qualify for a full French pension, want to set aside more for your retirement, or simply want to make some tax-efficient investments, there are options available.

PER/PERP

The only private pension plan available in France is a Plan d’Epargne Retraite (PER), a retirement savings plan. As of October 1st, 2019, the PER will eventually replace the Plan d’Epargne Retraite Populaire (PERP) and the Madelin (a similar pension saving plan for self-employed workers).

The main difference between the PER and the Madelin/PERP is that you have more flexibility regarding how much you pay into them and when, and more choices regarding how you can access the money once you reach retirement age – as capital, an annuity, or a mix of both.

Most banks offer PERs, but the biggest draw is that they provide immediate tax advantages. Savings invested in a PER, PERP, or Madelin are tax-deductible up to a limit of 10% of your income. If you are a high taxpayer in France, this might be a beneficial option for you.

Assurance Vie

France’s most popular tax-efficient savings plan is known as an Assurance Vie (not to be confused with ‘life insurance’, which is known as an assurance décès in France). These are a type of financial investment which are free from French income and capital gains tax during the investment stage (so you won’t be paying annual taxes on your investments), and offer the opportunity to make unlimited investments. As well as being a tax-efficient way to save, Assurance Vie contracts are also useful for estate and inheritance planning.

Find Out More About Your Pension in France

If you have more questions about your pension in France or want to find out more about your specific circumstances, it’s a good idea to seek advice sooner rather than later.

Your first port of call should be the official Assurance Retraite website which you can find here. After creating an account, you can track your contributions and accumulated trimestres and run a calculation of your estimated pension. They also have some English-language guides available here.

The Assurance Retraite YouTube page here has some handy videos (in French) which explain some of the basic concepts in easy-to-follow animated videos.

For self-employed workers on the Micro-Entrepreneur (Auto-Entrepreneur) regime, you can find more about how your French pension is calculated here (in French).

The CLEISS website here has English language guides that take you through all the need-to-know information on French pension entitlements.

The French government’s expat guide also has a guide to French pensions in English, which you can find here.

Moving to France?

From applying for your visa and opening a French bank account, to integrating in your new community – FrenchEntrée is here to help! Let our Essential Reading and Visa & Residency articles guide you through the whole process, then visit our Owning Property, French Tax, Healthcare, and Life in France zones for everything else you need to know.

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